The History of England from the Accession of James II, Vol. 4

T >> Thomas Babington Macaulay >> The History of England from the Accession of James II, Vol. 4

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Thus ended, more happily than William had a right to expect, one
of the most dangerous contests in which he ever engaged with his
Parliament. At the Dutch Embassy the rising and going down of
this tempest had been watched with intense interest; and the
opinion there seems to have been that the King had on the whole
lost neither power nor popularity by his conduct.502

Another question, which excited scarcely less angry feeling in
Parliament and in the country, was, about the same time, under
consideration. On the sixth of December, a Whig member of the
House of Commons obtained leave to bring in a bill for the
Naturalisation of Foreign Protestants. Plausible arguments in
favour of such a bill were not wanting. Great numbers of people,
eminently industrious and intelligent, firmly attached to our
faith, and deadly enemies of our deadly enemies, were at that
time without a country. Among the Huguenots who had fled from the
tyranny of the French King were many persons of great fame in
war, in letters, in arts and in sciences; and even the humblest
refugees were intellectually and morally above the average of the
common people of any kingdom in Europe. With French Protestants
who had been driven into exile by the edicts of Lewis were now
mingled German Protestants who had been driven into exile by his
arms. Vienna, Berlin, Basle, Hamburg, Amsterdam, London, swarmed
with honest laborious men who had once been thriving burghers of
Heidelberg or Mannheim, or who had cultivated vineyards along the
banks of the Neckar and the Rhine. A statesman might well think
that it would be at once generous and politic to invite to the
English shores and to incorporate with the English people
emigrants so unfortunate and so respectable. Their ingenuity and
their diligence could not fail to enrich any land which should
afford them an asylum; nor could it be doubted that they would
manfully defend the country of their adoption against him whose
cruelty had driven them from the country of their birth.

The first two readings passed without a division. But, on the
motion that the bill should be committed, there was a debate in
which the right of free speech was most liberally used by the
opponents of the government. It was idle, they said, to talk
about the poor Huguenots or the poor Palatines. The bill was
evidently meant for the benefit, not of French Protestants or
German Protestants, but of Dutchmen, who would be Protestants,
Papists or Pagans for a guilder a head, and who would, no doubt,
be as ready to sign the Declaration against Transubstantiation in
England as to trample on the Cross in Japan. They would come over
in multitudes. They would swarm in every public office. They
would collect the customs, and gauge the beer barrels. Our
Navigation Laws would be virtually repealed. Every merchant ship
that cleared out from the Thames or the Severn would be manned by
Zealanders and Hollanders and Frieslanders. To our own sailors
would be left the hard and perilous service of the royal navy.
For Hans, after filling the pockets of his huge trunk hose with
our money by assuming the character of a native, would, as soon
as a pressgang appeared, lay claim to the privileges of an alien.
The intruders would soon rule every corporation. They would elbow
our own Aldermen off the Royal Exchange. They would buy the
hereditary woods and halls of our country gentlemen. Already one
of the most noisome of the plagues of Egypt was among us. Frogs
had made their appearance even in the royal chambers. Nobody
could go to Saint James's without being disgusted by hearing the
reptiles of the Batavian marshes croaking all round him; and if
this bill should pass, the whole country would be as much
infested by the loathsome brood as the palace already was.

The orator who indulged himself most freely in this sort of
rhetoric was Sir John Knight, member for Bristol, a coarseminded
and spiteful Jacobite, who, if he had been an honest man, would
have been a nonjuror. Two years before, when Mayor of Bristol, he
had acquired a discreditable notoriety by treating with gross
disrespect a commission sealed with the great seal of the
Sovereigns to whom he had repeatedly sworn allegiance, and by
setting on the rabble of his city to hoot and pelt the Judges.503
He now concluded a savage invective by desiring that the Serjeant
at Arms would open the doors, in order that the odious roll of
parchment, which was nothing less than a surrender of the
birthright of the English people, might be treated with proper
contumely. "Let us first," he said, "kick the bill out of the
House; and then let us kick the foreigners out of the kingdom."

On a division the motion for committing the bill was carried by a
hundred and sixty-three votes to a hundred and twenty-eight.504
But the minority was zealous and pertinacious; and the majority
speedily began to waver. Knight's speech, retouched and made more
offensive, soon appeared in print without a license. Tens of
thousands of copies were circulated by the post, or dropped in
the streets; and such was the strength of national prejudice that
too many persons read this ribaldry with assent and admiration.
But, when a copy was produced in the House, there was such an
outbreak of indignation and disgust, as cowed even the impudent
and savage nature of the orator. Finding himself in imminent
danger of being expelled and sent to prison, he apologized, and
disclaimed all knowledge of the paper which purported to be a
report of what he had said. He escaped with impunity; but his
speech was voted false, scandalous and seditious, and was burned
by the hangman in Palace Yard. The bill which had caused all this
ferment was prudently suffered to drop.505

Meanwhile the Commons were busied with financial questions of
grave importance. The estimates for the year 1694 were enormous.
The King proposed to add to the regular army, already the
greatest regular army that England had ever supported, four
regiments of dragoons, eight of horse, and twenty-five of
infantry. The whole number of men, officers included, would thus
be increased to about ninety-four thousand.506 Cromwell, while
holding down three reluctant kingdoms, and making vigorous war on
Spain in Europe and America, had never had two thirds of the
military force which William now thought necessary. The great
body of the Tories, headed by three Whig chiefs, Harley, Foley
and Howe, opposed any augmentation. The great body of the Whigs,
headed by Montague and Wharton, would have granted all that was
asked. After many long discussions, and probably many close
divisions, in the Committee of Supply, the King obtained the
greater part of what he demanded. The House allowed him four new
regiments of dragoons, six of horse, and fifteen of infantry. The
whole number of troops voted for the year amounted to eighty-
three thousand, the charge to more than two millions and a half,
including about two hundred thousand pounds for the ordnance.507

The naval estimates passed much more rapidly; for Whigs and
Tories agreed in thinking that the maritime ascendency of England
ought to be maintained at any cost. Five hundred thousand pounds
were voted for paying the arrears due to seamen, and two millions
for the expenses of the year 1694.508

The Commons then proceeded to consider the Ways and Means. The
land tax was renewed at four shillings in the pound; and by this
simple but powerful machinery about two millions were raised with
certainty and despatch.509 A poll tax was imposed.510 Stamp
duties had long been among the fiscal resources of Holland and
France, and had existed here during part of the reign of Charles
the Second, but had been suffered to expire. They were now
revived; and they have ever since formed an important part of the
revenue of the State.511 The hackney coaches of the capital were
taxed, and were placed under the government of commissioners, in
spite of the resistance of the wives of the coachmen, who
assembled round Westminster Hall and mobbed the members.512 But,
notwithstanding all these expedients, there was still a large
deficiency; and it was again necessary to borrow. A new duty on
salt and some other imposts of less importance were set apart to
form a fund for a loan. On the security of this fund a million
was to be raised by a lottery, but a lottery which had scarcely
any thing but the name in common with the lotteries of a later
period. The sum to be contributed was divided into a hundred
thousand shares of ten pounds each. The interest on each share
was to be twenty shillings annually, or, in other words, ten per
cent., during sixteen years. But ten per cent. for sixteen years
was not a bait which was likely to attract lenders. An additional
lure was therefore held out to capitalists. On one fortieth of
the shares much higher interest was to be paid than on the other
thirty-nine fortieths. Which of the shares should be prizes was
to be determined by lot. The arrangements for the drawing of the
tickets were made by an adventurer of the name of Neale, who,
after squandering away two fortunes, had been glad to become
groom porter at the palace. His duties were to call the odds when
the Court played at hazard, to provide cards and dice, and to
decide any dispute which might arise on the bowling green or at
the gaming table. He was eminently skilled in the business of
this not very exalted post, and had made such sums by raffles
that he was able to engage in very costly speculations, and was
then covering the ground round the Seven Dials with buildings. He
was probably the best adviser that could have been consulted
about the details of a lottery. Yet there were not wanting
persons who thought it hardly decent in the Treasury to call in
the aid of a gambler by profession.513

By the lottery loan, as it was called, one million was obtained.
But another million was wanted to bring the estimated revenue for
the year 1694 up to a level with the estimated expenditure. The
ingenious and enterprising Montague had a plan ready, a plan to
which, except under the pressure of extreme pecuniary
difficulties, he might not easily have induced the Commons to
assent, but which, to his large and vigorous mind, appeared to
have advantages, both commercial and political, more important
than the immediate relief to the finances. He succeeded, not only
in supplying the wants of the State for twelve months, but in
creating a great institution, which, after the lapse of more than
a century and a half, continues to flourish, and which he lived
to see the stronghold, through all vicissitudes, of the Whig
party, and the bulwark, in dangerous times, of the Protestant
succession.

In the reign of William old men were still living who could
remember the days when there was not a single banking house in
the city of London. So late as the time of the Restoration every
trader had his own strong box in his own house, and, when an
acceptance was presented to him, told down the crowns and
Caroluses on his own counter. But the increase of wealth had
produced its natural effect, the subdivision of labour. Before
the end of the reign of Charles the Second, a new mode of paying
and receiving money had come into fashion among the merchants of
the capital. A class of agents arose, whose office was to keep
the cash of the commercial houses. This new branch of business
naturally fell into the hands of the goldsmiths, who were
accustomed to traffic largely in the precious metals, and who had
vaults in which great masses of bullion could lie secure from
fire and from robbers. It was at the shops of the goldsmiths of
Lombard Street that all the payments in coin were made. Other
traders gave and received nothing but paper.

This great change did not take place without much opposition and
clamour. Oldfashioned merchants complained bitterly that a class
of men who, thirty years before, had confined themselves to their
proper functions, and had made a fair profit by embossing silver
bowls and chargers, by setting jewels for fine ladies, and by
selling pistoles and dollars to gentlemen setting out for the
Continent, had become the treasurers, and were fast becoming the
masters, of the whole City. These usurers, it was said, played at
hazard with what had been earned by the industry and hoarded by
the thrift of other men. If the dice turned up well, the knave
who kept the cash became an alderman; if they turned up ill, the
dupe who furnished the cash became a bankrupt. On the other side
the conveniences of the modern practice were set forth in
animated language. The new system, it was said, saved both labour
and money. Two clerks, seated in one counting house, did what,
under the old system, must have been done by twenty clerks in
twenty different establishments. A goldsmith's note might be
transferred ten times in a morning; and thus a hundred guineas,
locked in his safe close to the Exchange, did what would formerly
have required a thousand guineas, dispersed through many tills,
some on Ludgate Hill, some in Austin Friars, and some in Tower
Street.514

Gradually even those who had been loudest in murmuring against
the innovation gave way and conformed to the prevailing usage.
The last person who held out, strange to say, was Sir Dudley
North. When, in 1680, after residing many years abroad, he
returned to London, nothing astonished or displeased him more
than the practice of making payments by drawing bills on bankers.
He found that he could not go on Change without being followed
round the piazza by goldsmiths, who, with low bows, begged to
have the honour of serving him. He lost his temper when his
friends asked where he kept his cash. "Where should I keep it,"
he asked, "but in my own house?" With difficulty he was induced
to put his money into the hands of one of the Lombard Street men,
as they were called. Unhappily, the Lombard Street man broke, and
some of his customers suffered severely. Dudley North lost only
fifty pounds; but this loss confirmed him in his dislike of the
whole mystery of banking. It was in vain, however, that he
exhorted his fellow citizens to return to the good old practice,
and not to expose themselves to utter ruin in order to spare
themselves a little trouble. He stood alone against the whole
community. The advantages of the modern system were felt every
hour of every day in every part of London; and people were no
more disposed to relinquish those advantages for fear of
calamities which occurred at long intervals than to refrain from
building houses for fear of fires, or from building ships for
fear of hurricanes. It is a curious circumstance that a man who,
as a theorist, was distinguished from all the merchants of his
time by the largeness of his views and by his superiority to
vulgar prejudices, should, in practice, have been distinguished
from all the merchants of his time by the obstinacy with which he
adhered to an ancient mode of doing business, long after the
dullest and most ignorant plodders had abandoned that mode for
one better suited to a great commercial society.515

No sooner had banking become a separate and important trade, than
men began to discuss with earnestness the question whether it
would be expedient to erect a national bank. The general opinion
seems to have been decidedly in favour of a national bank; nor
can we wonder at this; for few were then aware that trade is in
general carried on to much more advantage by individuals than by
great societies; and banking really is one of those few trades
which can be carried on to as much advantage by a great society
as by an individual. Two public banks had long been renowned
throughout Europe, the Bank of Saint George at Genoa, and the
Bank of Amsterdam. The immense wealth which was in the keeping of
those establishments, the confidence which they inspired, the
prosperity which they had created, their stability, tried by
panics, by wars, by revolutions, and found proof against all,
were favourite topics. The bank of Saint George had nearly
completed its third century. It had begun to receive deposits and
to make loans before Columbus had crossed the Atlantic, before
Gama had turned the Cape, when a Christian Emperor was reigning
at Constantinople, when a Mahomedan Sultan was reigning at
Granada, when Florence was a Republic, when Holland obeyed a
hereditary Prince. All these things had been changed. New
continents and new oceans had been discovered. The Turk was at
Constantinople; the Castilian was at Granada; Florence had its
hereditary Prince; Holland was a Republic; but the Bank of Saint
George was still receiving deposits and making loans. The Bank of
Amsterdam was little more than eighty years old; but its solvency
had stood severe tests. Even in the terrible crisis of 1672, when
the whole Delta of the Rhine was overrun by the French armies,
when the white flags were seen from the top of the Stadthouse,
there was one place where, amidst the general consternation and
confusion, tranquillity and order were still to be found; and
that place was the Bank. Why should not the Bank of London be as
great and as durable as the Banks of Genoa and of Amsterdam?
Before the end of the reign of Charles the Second several plans
were proposed, examined, attacked and defended. Some pamphleteers
maintained that a national bank ought to be under the direction
of the King. Others thought that the management ought to be
entrusted to the Lord Mayor, Aldermen and Common Council of the
capital.516 After the Revolution the subject was discussed with
an animation before unknown. For, under the influence of liberty,
the breed of political projectors multiplied exceedingly. A crowd
of plans, some of which resemble the fancies of a child or the
dreams of a man in a fever, were pressed on the government.
Preeminently conspicuous among the political mountebanks, whose
busy faces were seen every day in the lobby of the House of
Commons, were John Briscoe and Hugh Chamberlayne, two projectors
worthy to have been members of that Academy which Gulliver found
at Lagado. These men affirmed that the one cure for every
distemper of the State was a Land Bank. A Land Bank would work
for England miracles such as had never been wrought for Israel,
miracles exceeding the heaps of quails and the daily shower of
manna. There would be no taxes; and yet the Exchequer would be
full to overflowing. There would be no poor rates; for there
would be no poor. The income of every landowner would be doubled.
The profits of every merchant would be increased. In short, the
island would, to use Briscoe's words, be the paradise of the
world. The only losers would be the moneyed men, those worst
enemies of the nation, who had done more injury to the gentry and
yeomanry than an invading army from France would have had the
heart to do.517

These blessed effects the Land Bank was to produce simply by
issuing enormous quantities of notes on landed security. The
doctrine of the projectors was that every person who had real
property ought to have, besides that property, paper money to the
full value of that property. Thus, if his estate was worth two
thousand pounds, he ought to have his estate and two thousand
pounds in paper money.518 Both Briscoe and Chamberlayne treated
with the greatest contempt the notion that there could be an
overissue of paper as long as there was, for every ten pound
note, a piece of land in the country worth ten pounds. Nobody,
they said, would accuse a goldsmith of overissuing as long as his
vaults contained guineas and crowns to the full value of all the
notes which bore his signature. Indeed no goldsmith had in his
vaults guineas and crowns to the full value of all his paper. And
was not a square mile of rich land in Taunton Dean at least as
well entitled to be called wealth as a bag of gold or silver? The
projectors could not deny that many people had a prejudice in
favour of the precious metals, and that therefore, if the Land
Bank were bound to cash its notes, it would very soon stop
payment. This difficulty they got over by proposing that the
notes should be inconvertible, and that every body should be
forced to take them.

The speculations of Chamberlayne on the subject of the currency
may possibly find admirers even in our own time. But to his other
errors he added an error which began and ended with him. He was
fool enough to take it for granted, in all his reasonings, that
the value of an estate varied directly as the duration. He
maintained that if the annual income derived from a manor were a
thousand pounds, a grant of that manor for twenty years must be
worth twenty thousand pounds, and a grant for a hundred years
worth a hundred thousand pounds. If, therefore, the lord of such
a manor would pledge it for a hundred years to the Land Bank, the
Land Bank might, on that security, instantly issue notes for a
hundred thousand pounds. On this subject Chamberlayne was proof
to ridicule, to argument, even to arithmetical demonstration. He
was reminded that the fee simple of land would not sell for more
than twenty years' purchase. To say, therefore, that a term of a
hundred years was worth five times as much as a term of twenty
years, was to say that a term of a hundred years was worth five
times the fee simple; in other words, that a hundred was five
times infinity. Those who reasoned thus were refuted by being
told that they were usurers; and it should seem that a large
number of country gentlemen thought the refutation complete.519

In December 1693 Chamberlayne laid his plan, in all its naked
absurdity, before the Commons, and petitioned to be heard. He
confidently undertook to raise eight thousand pounds on every
freehold estate of a hundred and fifty pounds a year which should
be brought, as he expressed it, into his Land Bank, and this
without dispossessing the freeholder.520 All the squires in the
House must have known that the fee simple of such an estate would
hardly fetch three thousand pounds in the market. That less than
the fee simple of such an estate could, by any device, be made to
produce eight thousand pounds, would, it might have been thought,
have seemed incredible to the most illiterate foxhunter that
could be found on the benches. Distress, however, and animosity
had made the landed gentlemen credulous. They insisted on
referring Chamberlayne's plan to a committee; and the committee
reported that the plan was practicable, and would tend to the
benefit of the nation.521 But by this time the united force of
demonstration and derision had begun to produce an effect even on
the most ignorant rustics in the House. The report lay unnoticed
on the table; and the country was saved from a calamity compared
with which the defeat of Landen and the loss of the Smyrna fleet
would have been blessings.

All the projectors of this busy time, however, were not so
absurd as Chamberlayne. One among them, William Paterson, was an
ingenious, though not always a judicious, speculator. Of his early
life little is known except that he was a native of Scotland, and
that he had been in the West Indies. In what character he had
visited the West Indies was a matter about which his
contemporaries differed. His friends said that he had been a
missionary; his enemies that he had been a buccaneer. He seems to
have been gifted by nature with fertile invention, an ardent
temperament and great powers of persuasion, and to have acquired
somewhere in the course of his vagrant life a perfect knowledge
of accounts.

This man submitted to the government, in 1691, a plan of a
national bank; and his plan was favourably received both by
statesmen and by merchants. But years passed away; and nothing
was done, till, in the spring of 1694, it became absolutely
necessary to find some new mode of defraying the charges of the
war. Then at length the scheme devised by the poor and obscure
Scottish adventurer was taken up in earnest by Montague. With
Montague was closely allied Michael Godfrey, the brother of that
Sir Edmondsbury Godfrey whose sad and mysterious death had,
fifteen years before, produced a terrible outbreak of popular
feeling. Michael was one of the ablest, most upright and most
opulent of the merchant princes of London. He was, as might have
been expected from his near connection with the martyr of the
Protestant faith, a zealous Whig. Some of his writings are still
extant, and prove him to have had a strong and clear mind.

By these two distinguished men Paterson's scheme was fathered.
Montague undertook to manage the House of Commons, Godfrey to
manage the City. An approving vote was obtained from the
Committee of Ways and Means; and a bill, the title of which gave
occasion to many sarcasms, was laid on the table. It was indeed
not easy to guess that a bill, which purported only to impose a
new duty on tonnage for the benefit of such persons as should
advance money towards carrying on the war, was really a bill
creating the greatest commercial institution that the world had
ever seen.